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Default Déjà Vu for Argentina

On Monday, June 30, Argentina will probably enter into technical default. Again. A New York judge ruled on Friday that the US$832 million payment to the country’s holders of restructured bonds due on Monday was illegal, since it did not include the $1.5 billion payment to the holdout “vulture funds.” The future of Argentina’s financial credibility is still uncertain, as Cristina Kirchner’s administration stubbornly refuses to honor its commitments.

The callous name-calling is perhaps the most incredible byproduct of this whole affair, since it is the political elite in Argentina who have been truly acting as ravenous birds of prey for years vis-à-vis the taxpayers and retiring citizens.

NML Capital Ltd. and Aurelius, the plaintiffs in this case, bought Argentinean bonds from parties who refused to accept the terms proposed by the Argentinean government during the debt restructuring process carried out after the country’s gigantic default in 2001.

True to the style that characterizes many contemporary Latin-American leaders, President Cristina Kirchner immediately proceeded to insult these investors. She coined the term “vulture funds,” so as to denigrate the legitimate aspirations of these institutions and generate contempt towards them among the general public.…

What needs to be pointed out is that those who “killed” the small investors in this case were the birds of prey, not the vultures. The same political birds of prey that use legal force to take over people’s retirement funds, steal revenue from farmers with confiscatory export tariffs, and carry out expropriations and then refuse to pay.

A La Nación op-ed from December 2013 denounced Kirchnerismo for “misappropriating funds from the Social Security National Administration (ANSES) to finance government programs clearly meant to proselytize for the state, forcing more than 100,000 retirees to take on costly lawsuits to update their pension plans.… The federal government’s attitude toward the elderly has been to take advantage of them, as they are an easy, defenseless prey.”